Analysis & Opinion

* GDP grew a seasonally adjusted 1.4 pct in Q3 vs Q2
* Seasonally adjusted growth slowed pace
* Domestic demand increased 8.0 pct year on year
* Finance Minister says economic growth to slow in Q4
SANTIAGO, Nov 19 (Reuters) - Chile's economy kept expanding
at a fast clip in the third quarter versus the year-earlier
period, fueled by a jump in domestic demand, though growth
slowed slightly from the preceding quarter, central bank data
showed on Monday.
The small, export-dependent economy expanded 5.7 percent
from a year earlier. The country grew a
seasonally-adjusted 1.4 percent in the third quarter versus the
second quarter, slowing from an upwardly revised 2.0 percent
expansion in the second quarter from the first quarter.
"Save for industry and fishing, all industries grew," the
central bank said in its statement. "Mining, personal services,
business services and retail had the biggest effect overall."
"From a spending perspective, the motor behind GDP's
expansion was domestic demand, which grew 8.0 percent, fueled by
consumption and investment," the bank said, referring to the
domestic demand growth in the third quarter of this year as
compared with the third quarter of 2011. Domestic demand
increased 6.8 percent in the second quarter and 4.6 percent in
the first quarter, both year-on-year.
"We're going to see a slowdown in the last quarter of the
year ... we're already feeling it," Finance Minister Felipe
Larrain said on Monday, after the GDP data was released.
"This is an economy that is growing with strength, fueled by
investment and robust consumption," he said, adding that
inflationary risks were limited.
Chile may post growth of slightly more than the official
forecast of 5 percent this year, Larrain told Reuters earlier
this month, but he kept to a growth outlook for 2013 of 4.8
percent, noting that Chile faces slowing exports to Europe.
The world's No.1 copper producer grew 5.6 percent in the
January to September period compared with a year ago, t he bank
also said on Monday. Second quarter economic growth was upwardly
revised to 5.7 percent from a previous 5.5 percent rate.
Even as the Chilean economy gradually eases, domestic
demand's 8.0 percent expansion was the largest in a year.
"Economic growth continues to be very dynamic. Overheating
is a risk ... The growth data should be taken with caution,"
said Mario Arend, chief economist at Celfin Capital.
"We believe that interest rate cuts can be ruled out ... the
market will probably start to expect interest rate hikes for
next year," Arend added.
Chile's central bank kept its benchmark interest rate on
hold at 5.0 percent, as expected, on Tuesday for the 10th
consecutive month as robust local growth offset looming risks
from a slowdown in global demand.
Rates have stayed on hold since a cut in
January largely because the Andean nation has shown
better-than-expected resilience to slowing demand from top trade
partner China and fallout from the euro zone's crisis.
The benchmark interest rate is seen being held at its
current 5.0 percent in three, six, 12 and 24 months, the central
bank's fortnightly poll of traders showed on Wednesday.